Deutsche Bank reported third-quarter profit that exceeded expectations, but warned of job cuts in its investment bank as the European sovereign debt crisis caused trading revenue to plunge. The bank said its profit of 777mn euros ($1.1bn) in the three months ended Sept. 30 was helped by improvement in its consumer banking business. It reported a loss of 1.2bn euros in the period a year earlier. Investment Cuts. But pretax profit in the corporate banking and securities division, which includes the investment bank, plunged to 70mn euros in the quarter from 1.1bn euros in the period a year earlier, the bank said. In a conference call with analysts, the bank’s chief financial officer, Stefan Krause, said Deutsche Bank was taking another look at its investment banking unit as a result of the poor performance, adding that more job cuts were possible on top of the 10% reduction already under way. Banks around the world have seen profits from investment banking plunge, in part because of fears that another financial crisis is brewing, but also because they under pressure from regulators and shareholders to reduce risk and uncertainty. Josef Ackermann, the chief executive of Deutsche Bank, said the climate for banking was “more difficult than at any time since the end of 2008″ because of a deteriorating economy and financial market turbulence. “Our performance was, inevitably, impacted by this environment,” he said in a statement. He said the bank had taken steps to reduce risk in investment banking, and put more emphasis on selling banking services to consumers. Pretax profit in the private and business clients division, which includes consumer banking in Germany, rose 27% in the third quarter, to 310mn euros. Debt Exposure. Political leaders are pressuring banks to increase their reserves so they can withstand a default by Greece on its government bonds, a possibility that seems increasingly likely. The bank said its core Tier 1 equity, a measure of the bank’s ability to withstand financial shocks, was 10.1 percent at the end of the quarter, down from 10.2 percent at the end of the second quarter. European regulators are expected to push banks to raise the ratio to 9 percent by June at the latest, but that is after allowing for possible damage caused by the sovereign debt crisis or a slumping economy. In that case, Deutsche Bank, which reported a loss of 185 million euros related to holdings of Greek bonds in the quarter, is among institutions that may need to raise more capital. [Dealbook, 10/25/11]